UK Power Pricing Trends | 12 February 2021
The forward price curve steepened last week, with short-end power contracts moving lower week-on-week, while longer-dated contracts extended their recent gains. The month-ahead contract fell sharply throughout the week amid a bearish gas market backdrop; last week saw a considerable recovery in the U.K.’s LNG imports and more bearish weather fundamentals. Conversely, longer-dated seasonal forward contracts pushed higher in line with carbon EUAs, which surpassed €40/tonne for the first time – although gains in forward power contracts were limited by the bearish movements in the market’s short end.
UK Natural Gas Pricing Trends | 12 February 2021
The recovery in LNG imports and the promise of a busier tanker schedule in the weeks to come headlined a decidedly bearish week in the U.K. gas market. U.K. terminals welcomed nearly 1.2 million cubic meters of LNG in the first 12 days of February – versus just 0.67 million in the first 12 days of January. Forward prices felt the weight of windier and milder temperature forecast for the coming weeks. Nevertheless, record-high carbon prices continue to encourage coal-to-gas fuel switching across the continent, limiting any substantial downside on forward gas contracts.
UK Energy Complex | 12 February 2021
Global crude oil benchmarks pushed higher last week as OPEC+ output restrictions continue. Moreover, there is little indication that the cartel will taper cuts in the near future. Additionally, Bank of America (BoA) suggested that oil demand could rise at the fastest pace since the 1970s in the next 3 years, as the global economy pulls out of the pandemic-driven crisis. The view of BoA echoes the wider market sentiment which is underpinning the price gains in crude benchmarks. Brent crude pushed to its highest price level since December 2019 throughout the week.
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